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Any Bets on What the FED will do Next Week?



October 23, 2008 – Comments (3)

Most expect the fed to lower interest rates again next week.  The question is by how much. A .25 cut would really do little in my opinion.  A .5 one is more likely.  But I say make it .75.  It would be a big enough splash as to really make equities more attractive just from a yield perspective alone.  I submit that would even push the DOW back over 9k and even closer to 10k.  We really are getting too close to the Oct 10 bottom which could be tested yet again, I fear, on Friday.  The redemptions and margin calls are just snowballing too much.  This market really has become a casino now.  I really don't even want to look at my portfolio anymore until 2010 (tho could be a nice surprise with all the dividends accumulating).

3 Comments – Post Your Own

#1) On October 23, 2008 at 11:17 PM, jgseattle (26.12) wrote:

It is not the cost of credit that is a BIG problem it is the lack of faith that you will get ANYTHING back.  So I do not see a rate cut as all that important.

Of course it will help stocks but just think about what the real problem is.

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#2) On October 23, 2008 at 11:27 PM, awallejr (35.12) wrote:

Well when you start seeing CDs and money market accounts yielding under 2% while some quality stocks offering dividend yields over 7% people might actually start investing again. You have to stop the snowballing out of the market or you could have a true total collapse.


Yes the deleveraging has to play out, but if we can curtail the "snowballing" it might make things less painful.

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#3) On October 24, 2008 at 5:20 AM, DemonDoug (31.27) wrote:

i have a feeling that they will hold rates steady, but if they do do something it'll be a quarter point cut. 

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